KUCHING: Malaysia Airports Holdings Bhd’s (MAHB) first half of financial year 2017 (1HFY17) results have surpassed analysts’ estimates, either coming in above or meeting expectations.
In a filing on Bursa Malaysia, MAHB reported that the group recorded a profit before tax (PBT) for the financial period-to-date under review amounted to RM192.2 million as compared to a PBT of RM55.7 million in the corresponding period last year, a favourable variance of 245.1 per cent or RM136.5 million.
MAHB’s 1HFY17 core net profit of RM128.9 million came in above AmInvestment Bank Bhd’s (AmInvestment Bank) expectation at 65 per cent of its full-year forecast but within consensus at 52 per cent.
Meanwhile, MAHB’s 1HFY17 results accounted for 38 per cent of the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) full year forecast (and 52 per cent of consensus).
In spite of that, MIDF Research regarded the result as in line as the research arm expected 2HFY17 to be stronger due to seasonal effect.
As for the group’s interim dividend of five sen, it was within both MIDF Research and AmInvestment Bank’s estimates.
“Notwithstanding the cost pressures, we see further room for improvement for MAHB in 2HFY17,” MIDF Research said.
“We continue to be bullish on MAHB’s ability to grow its topline, benefitting from continuous capacity expansion by both local and foreign carriers.”
In addition, the research arm foresaw inbound/outbound travel demand to remain buoyant from the easing of entry visa requirements and fare discounting.
Overall, MIDF Research liked MAHB as a proxy to Malaysia’s resilient inbound/outbound travel industry, as the largest airport operator in Malaysia.
“MAHB received an extension of its operating agreement (OA) which will last until 2069, providing clarity to investors on its longer term prospects as an airport concessionaire.
“Meanwhile, the company has imposed onto itself a one-year timeframe for negotiations with the Government on the terms and conditions for its OA extension,” the research arm said.
Items of interest to the research arm included the rate of user fee MAHB pays to the Government and source of funding for capital expenditure, of which favourable negotiations could prompt upward revisions to forecasts.
On forecasts, AmInvestment Bank increased its FY17-19F net earnings forecasts by 21- 31 per cent to reflect the anticipated stronger performance in MAHB’s Malaysian operations.
Consequently, AmInvestment Bank raised the research firm’s discounted cash flow (DCF)-based fair value to RM8.78 per share (from RM7.62 per share), based on a discount rate of 8.9 per cent which was equivalent of its weighted average cost of capital (WACC).
The research firm maintained its ‘hold’ call on MAHB. Meanwhile, MIDF Research maintained ‘buy’ with a target price of RM9.98 per share.